Market deceleration slows Q3 margin lending

Saigon Securities Inc's branch in Ha Noi. The compay is among seven brokerages which reduced their lending to stock investors. - VNS Photo Doan Tung

Ending September, the total lending to stock investors by the 17 biggest brokerage companies crossed VND24 trillion (US$1.1 billion), with a rise of just 2 per cent compared to the end of the second quarter.

Securities companies lent over VND23.5 trillion in the first half of 2016.

However, the nine-month margin value is still 16.8 per cent higher than that at the beginning of the year.

Stock analysts have attributed it to a slowdown in the market in the third quarter.

The benchmark VN-Index on the HCM Stock Exchange rose by around 8.5 per cent in the last three months; it climbed 14.7 per cent in the second quarter.

Seven brokerages decreased their lending to stock investors, including Saigon Securities Inc, HCM City Securities Corporation, Viet Capital Securities JSC, ACB Securities Co Ltd, Bao Viet Securities JSC, Military Bank Securities JSC and VP Bank Securities JSC.

Saigon Securities Inc, the biggest brokerage firm in both the HCM City and Ha Noi stock exchanges, cut lending the most, with a decrease of around VND400 billion. Viet Capital Securities followed with VND300 billion and ACB Securities with VND213 billion.

On the other end of spectrum, some firms saw their lending rise, such as VNDirect Securities JSC, which gave out additional loans of more than VND600 billion, up 41 per cent over the first half, and became the third largest lender with its total loans valued around VND2.1 trillion in end-September.

Tan Viet Securities Inc, a new entrant in the top 10 brokerages list on the Ha Noi Stock Exchange, pushed lending up to VND666 billion in nine months, up 16.2 per cent since the end of June.

Ten companies have given a total loan of over VND1 trillion each by the end of September. Saigon Securities Inc remains the biggest lender with nearly VND4 trillion, followed by HCM City Securities with over VND2.9 trillion and VNDirect Securities with nearly VND2.1 trillion.

Leveraged transactions had increased significantly since the beginning of the year and put pressure on the market in the short term, said Nguyen Viet Quang, deputy head of brokerage house in Vietcombank Securities JSC.

However, Quang said, lending was focused on large-cap stocks so the exposure risk was not too high as leading stocks usually recovered quickly after each downward correction.

There are around 700 stocks trading in the two markets, but close to 200 stocks are not eligible for margin lending.